related party transactions come full circle

The related party disclosures in 2008 annual report raise questions on whether there properties were 'tipped in' to PAG by entities associated by directors at inflated prices...here are the two most interesting ones:

1. Lakeland Downs

Lakeland Downs Management Pty Ltd as trustee for the Lakeland Downs Trust was the owner of the "Lakeland Downs" and "Nelgai" properties at Condamine. The properties were acquired by PrimeAg as one of its Seeded Properties as disclosed in the Prospectus. Mr S A Williams had a 9.68% interest and Mr P Corish has a 50% interest in the Lakeland Downs Trust as unitholders and therefore have interests in the Lakeland Downs Trust. The purchase price was $7,046,225.

*** Book value of Lakeland Downs was $7.3m, scheme consideration allocated by BV for Lakeland Downs is $5.6m, a discount of 22%)***


2. Emerald (Brayland, Lochiel, Parker)


Mr P Corish had a 25% interest in Brayland Farming Pty Ltd. Brayland Farming Pty Limited was the owner of the "Brayland" property at Emerald. PrimeAg acquired this property as one of its Seeded Properties as disclosed in the Prospectus. The purchase price was $26,350,000.

On 26th May 2008, PrimeAg announced the purchase of Lochiel for 12.2m

On 18th June 2009, PrimeAg announced the purchase of Parker for $7.5m

Total purchase cost for the Brayland/Emerald aggregation as disclosed in the notice of meeting was $51.1m, plus $5.9m spent on capital development = $57m

*** Scheme inter-conditional offer of $30.9m represents a 46% discount to Emerald/Brayland's total capital cost.***

Will be interesting to see what the 'independent' expert's report concludes...

Also intriguing that AFF, by taking out the equity after selling Emerald, not only gets $11.8m in off-balance sheet water rights value for free, but also a big capital gains tax shield resulting from the $20m+ capital loss on Emerald...